Wu’s case has triggered a high-profile controversy in China over the use of capital punishment for nonviolent crimes.

The Supreme People’s Court sent the case back to the highest court in Zhejiang province for resentencing, according to the report by the New China News Agency.

“We’re relatively satisfied with these results,” said Wu’s attorney Zhang Yanfeng. “Wu Ying’s life has been saved.”

Wu is famous in China for her rags-to-riches story. After opening a hair salon at age 15, she built a business empire that spanned such areas as karaoke clubs, cosmetics and hotels. She was sentenced to death in 2009 for illegally raising millions of dollars from investors from 2005 to 2007. The ruling was upheld by the provincial court in January.

Critics of the death sentence, some of them prominent businessmen, had denounced it as a step backward for China's largely state-controlled legal system. Many claimed that Wu’s fundraising strategy was no different from that of most Chinese entrepreneurs and that the ruling would have a chilling effect on private enterprise.

Online polls showed overwhelming support for Wu, who had long been exalted by Chinese magazines as a role model for entrepreneurial youth. By some estimates, Wu was at one time China's 68th wealthiest person.

Lan Rongjie, an assistant professor of law at Zhejiang University, said that the decision to overturn her sentence could represent “a slight modification of the court’s attitude towards the death penalty.” The court’s leniency could be a response to public outrage, he explained, but could also be related to high-level efforts to reform China’s state-controlled banking system.

In a speech earlier this month, Prime Minister Wen Jiabao called for an end to state-owned banks’ virtual monopoly over lending. "To allow private capital to flow into finance, basically, we need to break the monopoly," Wen said, according to the Associated Press.

Court reports said that Wu had spent $1.59 million on luxury items including clothes, fancy dinners and cosmetics, in addition to owning four BMW cars and a $600,000 Ferrari.

"Wu obtained an extremely large sum of money through fraudulent fundraising, causing severe losses to the victims, undermining the national financial order and creating extremely harmful effects, and thus entails a penalty in line with the law," the court said in a statement.

Wu's attorney Zhang maintains his client's innocence.

About 4,000 people are executed in China each year, according to Dui Hua, a San Francisco-based human rights organization. The Supreme People’s Court has been taking steps to reduce the number of crimes that are punishable by death, yet capital punishment for economic crimes such as corruption is still common.

“Upon seeing the news that my daughter Wu Ying’s death penalty was not approved and that the investigation will be resumed, I can finally breathe a sigh of relief,” said Wu’s father, Wu Yongzheng, in a post on Sina Weibo, China’s popular Twitter-like service. “But a line that has been stretched taut can no longer be relaxed, because we don’t know what the final consequences will be, and this ordeal still continues.”